5.1 © 2006 by Prentice Hall 5 Chapter Ethical and Social Issues in the Digital Firm

5.2 © 2006 by Prentice Hall OBJECTIVES Analyze the relationship among ethical, social, and political issues that are raised by information systems Identify the main moral dimensions of an information society and specific principles for conduct that can be used to guide ethical decisions Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm

5.3 © 2006 by Prentice Hall Evaluate the impact of contemporary information systems and the Internet on the protection of individual privacy and intellectual property Assess how information systems have affected everyday life Identify the principal management challenges posed by the ethical and social impact of information systems and management solutions OBJECTIVES (Continued) Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm

5.4 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS In the past, so-called “white collar” crimes were treated with a slap on the wrist and fines to restore any damage done. Industrial societies have become much less tolerant of financial, accounting, and computer crimes. Since the late 1980s in the United States, and worldwide, legislation has been passed that mandates severe penalties for managers who are found guilty of a wide variety of financial, reporting, and computer crimes A New Legal and Social Environment

5.5 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS Principles of right and wrong (for individuals)Principles of right and wrong (for individuals) Assumes individuals are acting as free moral agents to make choices to guide their behaviorAssumes individuals are acting as free moral agents to make choices to guide their behavior Even if someone else tells you what is right/wrong, you choose to follow that advice (or not).Even if someone else tells you what is right/wrong, you choose to follow that advice (or not). Ethics

5.6 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS Information technology creates ethical issues because: (a) IT changes the distribution of decision-making rights, power and other resources. Example: IT makes it possible for millions of people to download video files, weakening the exclusive rights of movie studios to control distribution for their own profit.

5.7 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS (b) IT creates new opportunities to commit crimes. Example: creates the conditions for extensive “phishing” or online con games designed to defraud ordinary citizens. Information technology creates ethical issues because:

5.8 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS Illustrates the dynamics connecting ethical, social, and political issuesIllustrates the dynamics connecting ethical, social, and political issues Identifies the moral dimensions of the “information society,” across individual, social, and political levels of actionIdentifies the moral dimensions of the “information society,” across individual, social, and political levels of action A IS Model for Thinking About Ethical, Social, and Political Issues

5.9 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS Information rights and obligations Organizational obligations to honor an individual’s privacy Property rights and obligations Organizational obligations to honor intellectual property Accountability and control Who is held accountable and liable for harm to privacy/property? System quality What standards are demanded for software quality & safety? Who is accountable when software causes harm? Quality of life What values are affected by the new Information-based society? Five Moral Dimensions of the Information Age

5.10 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS The Relationship between Ethical, Social, and Political Issues in an Information Society Figure 5-1

5.11 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS Changes in technology have some obvious positive consequences, but also create some potentially or actual negative consequences. Computing power doubles every 18 months: Dependence on computer systems increases, and it becomes more cost effective to process massive amounts of personal information.Computing power doubles every 18 months: Dependence on computer systems increases, and it becomes more cost effective to process massive amounts of personal information. Key Technology Trends that Raise Ethical Issues

5.12 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm UNDERSTANDING ETHICAL AND SOCIAL ISSUES RELATED TO SYSTEMS Rapidly declining data storage costs: Lowers the cost of creating huge national databases composed of private information; lowers the cost of storing and using illegal music files Data-mining advances: Increases the ability of firms and governments to track the movement of citizens throughout life Networking advances and the Internet: Remotely accessing personal data & high bandwidth Key Technology Trends Raise Ethical Issues (Continued)

5.13 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm ETHICS IN AN INFORMATION SOCIETY Responsibility: Accepting the potential costs, duties, and obligations for decisions Accountability: Social mechanisms in-place for identifying responsible parties -- who (what happens if you cannot identify who responsible?) Liability: Permits individuals (and firms) to recover damages done to them (via laws) Due process: Laws are well known and understood, with an ability to appeal to higher authorities Basic Concepts: Responsibility, Accountability, and Liability

5.14 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm ETHICS IN AN INFORMATION SOCIETY Golden Rule: Do unto others as you would have them do unto you (put yourself in their place) Immanuel Kant’s Categorical Imperative: If an action is not right for everyone to take, then it is not right for anyone Descartes’ rule of change: If an action cannot be taken repeatedly, then it is not right to be taken at any time (“slippery slope” argument) Candidate Ethical Principles for help making decisions

5.15 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm ETHICS IN AN INFORMATION SOCIETY Utilitarian Principle: Take the action that achieves the greatest value for all concerned Risk Aversion Principle: Take the action that produces the least harm or incurs the least cost to all concerned Ethical “no free lunch” rule: Assume that all tangible and intangible objects are owned by someone else, unless shown the contrary. If someone has created something of value to you, that person probably wants compensation for its use Candidate Ethical Principles (Continued)

5.16 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm ETHICS IN AN INFORMATION SOCIETY Using systems to increase efficiency, and causing layoffs and personal hardships Using systems to monitor employee to protect valuable assets, but decreasing employee privacy Monitoring employee use of the Internet at work, decreasing employee privacy Some Real-World IT Ethical Dilemmas

5.17 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm ETHICS IN AN INFORMATION SOCIETY Using huge databases to aggregate consumer information, reducing the costs of granting credit, but increasing the chance of losing personal data to criminals, terrorists, or others Some Real-World IT Ethical Dilemmas (Continued)

5.18 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Under what conditions should the privacy of others be invaded? What legitimates intruding into others’ lives through unobtrusive surveillance, through market research, or by whatever means? Do we have to inform people that we are eavesdropping? (wire tap, , cell phone, cordless?) Do we have to inform people that we are using credit history information for employment screening purposes? (hospital admission, insurance, …?) Ethical Issues What ethical principles can we use to analyze these situations?

5.19 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Privacy: Claim of individuals to be left alone, free from surveillance or interference from other individuals, organizations, or the state. The claim to be able to control information about yourself Fair information practices: Set of principles governing the collection and use of information on the basis of U.S. and European privacy laws Europe has much stricter privacy laws than US Information Rights: Privacy and Freedom in the Internet Age

5.20 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Cookies: Tiny files deposited on a hard driveTiny files deposited on a hard drive Used to identify the visitor and track visits to the Web site, last time visited, type of web browser, -- usually not personal infoUsed to identify the visitor and track visits to the Web site, last time visited, type of web browser, -- usually not personal info May or may not be used to gather personal private informationMay or may not be used to gather personal private information In most cases, only a visitors customer number is maintained, not any personal information.In most cases, only a visitors customer number is maintained, not any personal information. In some cases, personal information can be gathered by linking visitor to info voluntarily filled out by customerIn some cases, personal information can be gathered by linking visitor to info voluntarily filled out by customer Internet Challenges to Privacy

5.21 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Software downloaded onto a user’s computer— usually without knowledge—that tracks Web behavior and reports that behavior to a third-party server Spyware is also used to call for ads from third- party servers, or to divert customers from one site to a preferred site. For example, you enter and the spyware program takes you to and displays a discount coupon for Eddie Bauer. Spyware:

5.22 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS LL Bean sued. The adware manufacturer Gator.com changed the software, and stopped the marketing campaign. They settled out of court. Typically downloaded by file-sharing programs like Kazaa, who make money selling advertising to large consumer products, retailing, and clothing companies. Spyware: (Continued) CAN- SPAM

5.23 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Intangible property of any kind created by individuals or corporationsIntellectual property: Intangible property of any kind created by individuals or corporations Three main ways that intellectual property is protected: Trade secret: Intellectual work or product belonging to business, not in the public domain Property Rights: Intellectual Property

5.24 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Copyright: Statutory grant protecting intellectual property from being copied for the life of the author, plus 70 years Underlying ideas not protected, only manifestation A grant to the creator of an invention granting the owner an exclusive monopoly on the ideas behind an invention for 20 yearsPatents: A grant to the creator of an invention granting the owner an exclusive monopoly on the ideas behind an invention for 20 years Property Rights: Intellectual Property Three main ways that intellectual property is protected: (Continued)

5.25 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Perfect digital copies cost almost nothing.Perfect digital copies cost almost nothing. Sharing of digital content over the Internet costs almost nothing.Sharing of digital content over the Internet costs almost nothing. Courts have generally not interfered with the commercialization of technology that creates perfect copies of protected works as long as the manufacturer could not control how customers use its products (sue TiVo ?).Courts have generally not interfered with the commercialization of technology that creates perfect copies of protected works as long as the manufacturer could not control how customers use its products (sue TiVo ?). How has this issue affected the introduction of technologies such as digital VCRs, DVD recorders, digital back-up software?How has this issue affected the introduction of technologies such as digital VCRs, DVD recorders, digital back-up software? Challenges to Intellectual Property Rights

5.26 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS IT can challenge our ability to identify who is responsible for actions involving systems that injure people. (is it the software programmer, manager, firm, QA, marketing, training?) IT can make it difficult to assign liability and restore injured persons. IT raises issues about who should control information systems that have the potential for injuring citizens. IT: Accountability, Liability, and Control

5.27 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS No software program (of any complexity) is perfect, “errors” will be made, even if the errors have a low probability of occurring. Errors in Windows operating systems were notorious. At what point should software “be shipped?” What kind of disclaimer statements might be appropriate? Ethics and System Quality: Data Quality and System Errors

5.28 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS No database is without errors. In fact, most consumer and government personal information databases have errors ranging from % of the data records being either inaccurate, incomplete, or ambiguous. How should decision makers treat this kind of information in order to be fair to data subjects? Ethics and System Quality: Data Quality and System Errors (Continued)

5.29 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Equity and access: While 500 million people worldwide are on the Internet, billions of others are not. Within the United States, the digital divide has declined among ethnic groups, but still persists. The divide between men and women has largely disappeared. IT and Quality of Life Issues: Equity, Access, and Boundaries (Continued)

5.30 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Eyestrain conditionEyestrain condition Related to computer display screen usageRelated to computer display screen usage Symptoms include headaches, blurred vision, and dry and irritated eyesSymptoms include headaches, blurred vision, and dry and irritated eyes Computer Vision Syndrome (CVS):

5.31 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm THE MORAL DIMENSIONS OF INFORMATION SYSTEMS Stress induced by computer useStress induced by computer use Symptoms include aggravation, hostility toward humans, impatience, and enervationSymptoms include aggravation, hostility toward humans, impatience, and enervation Technostress:

5.32 © 2006 by Prentice Hall MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm Managers have the opportunity to use information technology to create an ethical business and social environment. This does not mean management actions will always please all stakeholders, but at least management actions should take into account the ethical dimensions of IT-related decisions. Management Opportunities:

5.33 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm Understanding the moral risks of new technology Establishing corporate ethics policies that include information systems issues Management Challenges: MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS

5.34 © 2006 by Prentice Hall Management Information Systems Chapter 5 Ethical and Social Issues in the Digital Firm Spell out privacy and due process policies (Information rights and obligations) Clarify actions to preserve SW rights (Property rights and obligations) Document quality standards (System quality) Corporate policy for RSI (Quality of life) Clarify who is responsible/accountable/liable for mishandling company info (Accountability and control) Solution Guidelines: specifically for IT areas that cover the 5 major moral dimensions: Management should devise policies and ethical standards specifically for IT areas that cover the 5 major moral dimensions: MANAGEMENT OPPORTUNITIES, CHALLENGES, AND SOLUTIONS